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United States v. W.A. Foote Memorial Hospital

United States District Court, E.D. Michigan, Southern Division

December 20, 2017

United States of America and State of Michigan, Plaintiffs,
W.A. Foote Memorial Hospital, d/b/a Allegiance Health, Defendant.

          David R. Grand Mag. Judge


          Judith E. Levy United States District Judge

         On June 25, 2015, the United States of America and the State of Michigan brought a civil antitrust action to enjoin allegedly unlawful agreements by defendants Hillsdale Community Health Center (“Hillsdale”), W.A. Foote Memorial Hospital, d/b/a Allegiance Health (“Allegiance”), Community Health Center of Branch County (“Branch”), and ProMedica Health System, Inc. (“ProMedica”). (Dkt. 1.) Plaintiffs allege that the agreements are “naked restraints of trade that are per se unlawful under Section 1 of the Sherman Act, 15 U.S.C. § 1, and Section 2 of the Michigan Antitrust Reform Act, MCL 445.772.” (Id. at 3.)

         On October 21, 2015, the Court entered an order dismissing defendants Hillsdale, Branch, and ProMedica after those parties (“Settling Defendants”) entered into a settlement agreement (“2015 Agreement”). (Dkt. 37.) The 2015 Agreement required the Settling Defendants to “agree to undertake certain actions and refrain from certain conduct for the purpose of remedying the anticompetitive effects alleged in the Complaint.” (Dkt. 36 at 2.) In particular, the Settling Defendants were required to end any and all agreements with other providers that “prohibit[] or limit[] marketing” or “allocate[] any geographic market or territory between or among the Settling Defendant[s] and any other provider[s].” (Id. at 7.) Defendant Allegiance did not enter into the 2015 Agreement, and remains the only defendant in this case.

         I. Background

         In their complaint, plaintiffs request a declaratory judgment that “defendants' agreements limiting competition constitute illegal restraints of interstate trade” (Dkt. 1 at 13), and prospective relief including an injunction precluding “defendants and their members, officers, agents, and employees from continuing or renewing in any manner the conduct alleged herein or from engaging in any other conduct, agreement, or other arrangement having the same effect as the alleged violations” (Id. at 13-14). They also seek a requirement for defendants “to institute a comprehensive antitrust compliance program to ensure that defendants do not establish any similar agreements and that defendants' members, officers, agents, and employees are fully informed of the application of the antitrust laws to hospital restrictions on competition.” (Id. at 14.)

         The complaint underlying the requested relief derives from allegations of an anti-competitive agreement between Allegiance and former co-defendant Hillsdale. Because the 2015 Settlement required Hillsdale to end any agreement to limit marketing, including any agreement with Allegiance, the Court was concerned that there may no longer be an ongoing controversy at issue in the case. On July 20, 2017, the Court ordered the parties to submit supplemental briefing on the question of whether there is a live case or controversy before the Court. (Dkt. 107.)

         In their supplemental brief, plaintiffs argue that (1) the fact that Hillsdale has ended its agreement with Allegiance does not deprive the Court of jurisdiction, as it may still grant effective relief; and (2) extending the reach of the mootness doctrine to cases like this one would have negative policy consequences, including encouraging defendants to hold out from settling. (Dkt. 108 at 6.)

         Defendant argues that “to the extent that the alleged unlawful conduct . . . ever occurred (which Allegiance denies), it has long since ceased, and is unlikely to occur in the future.” (Dkt. 109 at 1.) Defendant further argues that “[e]ven if the Court chooses to retain jurisdiction over the case at this time, the prospective relief requested by plaintiffs is unnecessary and unwarranted.” (Id. at 10.)

         The Court heard oral argument on the question on October 15, 2017. For the reasons set forth below, the Court concludes that it retains jurisdiction in this case.

         II. Legal Standard

         Federal judicial power is restricted by the Constitution to actual cases or controversies. Spokeo, Inc. v. Robbins, 136 S.Ct. 1540, 1547 (2016). The mootness doctrine arises from this Article III requirement because an action that is moot cannot be considered a live case or controversy. “[A] case is moot when the issues presented are no longer ‘live' or the parties lack a legally cognizable interest in the outcome.” Los Angeles County v. Davis, 440 U.S. 625, 631 (1979) (quoting Powell v. McCormack, 395 U.S. 486, 496 (1969)). Courts “have a ‘continuing obligation' to enquire [sic] whether there is a present controversy as to which effective relief can be granted.” Coal. for Gov't Procurement v. Fed. Prison Indus., 365 F.3d 435, 458 (6th Cir. 2004) (quoting Southwest Williamson County Cmty. Assoc. v. Slater, 243 F.3d 270, 276 (6th Cir. 2001)).

         Federal courts have broad authority to order equitable relief in antitrust cases. Int'l Salt Co. v. United States, 332 U.S. 392, 400-01 (1947) (District Courts “are invested with large discretion to model their judgments to fit the exigencies of the particular case.”). The goal of an equitable antitrust suit is neither to simply punish past behavior nor to merely end specific illegal practices. Id. at 401. The goal is to “effectively pry open to competition a market that has been closed by defendants' illegal restraints.” Id.

         Courts have a wide range of means at their disposal to further this goal. Fed. Trade Comm'n v. Nat'l Lead Co., 352 U.S. 419, 430 (1957) (Courts are “obliged not only to suppress the unlawful practice but to take such reasonable action as is calculated to preclude the revival of the illegal practices.”) Finally, “the mootness doctrine inquires into a court's authority to order a remedy, not the likelihood or ...

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